Matching Distribution to Your Goals

A small company must work harder at focusing limited resources, especially with distribution and sales force options. In some cases, the only sales force option is for the owner to do it himself or herself, as in a small retail shop, or consulting/service businesses.

Some distribution channels and sales force options may be attractive, but off-strategy for the small company. A list of all possible distribution channels and accompanying sales force options should be matched against company marketing objectives.

For example, a company selling gourmet cooking equipment has many options for distribution and sales force representation, including:

• company retail stores, with company sales personnel
• specialty food stores, with sales brokers
• department stores, with sales brokers
• hardware stores, with sales brokers
• specialty chains (e.g., Williams-Sonoma, Crate & Barrel), with sales brokers
• direct mail, with company personnel
• distributors, with company sales managers, brokers, distributor sales reps

The company's products are positioned as the highest-quality cookware, used by celebrity chefs and guaranteed for the life of the end user/buyer. Target end users/buyers are upscale, well-educated, urban consumers who read upscale food magazines (e.g., Gourmet, Food & Wine), dine out at gourmet restaurants, drink wine, travel, drive expensive cars, and spend heavily on luxury purchases. Ideally, the company wants their products distributed through every upscale channel that caters to this exclusive target group.

Because of the positioning of the gourmet cookware, the company believed that hardware stores and direct mail were not consistent with the image and reputation that they were trying to establish with their positioning. Company retail stores, while desirable, were financially risky and too expensive at the early stage of development. Distributors were also eliminated because of the time and knowledge required of distributor sales personnel, coupled with the belief that distributors could not be encouraged to learn enough or devote enough time to the product line. In addition, the estimated 35 percent to 40 percent discount with shipping expense to distributors was financially unattractive.

The company decided the best distribution channels were direct sales to specialty stores and upscale department stores such as Marshall Field's, Bloomingdale's, and Nieman-Marcus. Their sales force consisted of three regional managers with professional cooking experience, who also did demos in stores with the cookware. In addition, the company had the extra margin available to afford this highly trained and motivated sales force since distributors were not utilized.